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Intercompany that a parent owns 100% controlling interest in its long-held subsidiary. On January 1,...

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Accounting

Intercompany that a parent owns 100% controlling interest in its long-held subsidiary. On January 1, 2015, a parent company sold land to the subsidiary for $530,000. The land originally cost the parent $380,000 when it was purchased on January 1, 2006. The parent company uses the equity method to account for its pre-consolidation investment in the subsidiary. Related to the transferred land, which of the following items is true regarding the preparation of the consolidated financial statements for the year ending December 31, 2016?

A. The consolidation entries will include a $150,000 debit to gain on sale of Land.

B. The consolidation entries will include a $150,000 debit to investment in Subsidiary.

C. The consolidation entries will include a $380,000 debit to land.

D. The consolidation entries will include a $150,000 debit to land.

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